Thu,Mar24, 2011 |Source:Reuters
South Korea's top steelmaker POSCO said on Thursday it had revised its sales volume target up by 1 million tonnes and will raise output to meet orders from clients in disaster-hit Japan.
Hwang Eun-Yeon, executive vice president at POSCO, also told the Reuters Global Mining and Steel Summit that the world's third largest steelmaker is finding it hard to fully pass on USD 160-USD 180 per tonne of increased costs to clients in the second quarter.
"We are aiming to meet the requests (from Japan) by raising output, although we cannot meet all," Hwang said, adding that it aims to sell more than 35 million tonnes of steel products this year from its previous target of 34 million tonnes.
South Korea's top steelmaker expects to receive a minimum of 1.5 million tonnes of steel requests from Japanese clients this year after Japan's worst quake on record, Hwang said.
Japanese steel mill Nippon Steel, JFE Steel and Sumitomo Metal Industries said on Tuesday that their quake-hit furnaces were resuming operations after being hit by March 11 earthquake and tsunami.
Shares of Korean steelmakers including POSCO, whose leading shareholders include Berkshire Hathaway Inc, rallied after the quake, on expectations that they would benefit from reduced shipments from Japan at home and the Asian markets.
Shares of POSOC closed 0.4% lower at 497,500 won on Thursday, underperforming the broader market.
Hard to fully pass on cost rise to clients
Asked how much and when POSCO would raise prices, Hwang said: "We need to raise steel prices by 200,000 won (USD 178.3) per tonne due to rising costs, but I don't think we can raise that much." POSCO is considering lifting prices in early or middle part of April-June period, he added.
Analysts ranged POSCO's possible price hikes at 100,000 won through 150,000 won, while Hwang said "100,000 won was too low."
Lee Won-jae, an analyst at SK Securities, said: "Even if POSCO were to raise more than 100,000 won, it would be difficult to maintain such prices due to the gap with imports from Japan and China. The domestic market is driven by buyers, not sellers."
POSCO has held local steel prices flat since it hiked in June 2010 for third-quarter sales. For the October-December quarter last year, POSCO posted lower-than-expected profit because of its failure to pass on surging costs to customers.
South Korea's second-largest steelmaker Hyundai Steel said on Tuesday it needs to hike major steel product prices no later than early April. Two leading Chinese steelmakers increased prices for the third month in a row for March, before keeping them unchanged for April.
Hwang said Asia's steel demand is seen healthy, driven by expected demand as Japan moves to repair quake-related damages, adding that China's recent efforts to tame inflation through tighter monetary policy were "not too worrisome."
"The quake dampens Japan's steel demand in the short term, but eventually the demand will jump because a large amount of industrial materials are in need for reconstruction," he said.
Tags: POSCO, steelmaker, South Korea, Japan, Hwang Eun-Yeon
Hwang Eun-Yeon, executive vice president at POSCO, also told the Reuters Global Mining and Steel Summit that the world's third largest steelmaker is finding it hard to fully pass on USD 160-USD 180 per tonne of increased costs to clients in the second quarter.
"We are aiming to meet the requests (from Japan) by raising output, although we cannot meet all," Hwang said, adding that it aims to sell more than 35 million tonnes of steel products this year from its previous target of 34 million tonnes.
South Korea's top steelmaker expects to receive a minimum of 1.5 million tonnes of steel requests from Japanese clients this year after Japan's worst quake on record, Hwang said.
Japanese steel mill Nippon Steel, JFE Steel and Sumitomo Metal Industries said on Tuesday that their quake-hit furnaces were resuming operations after being hit by March 11 earthquake and tsunami.
Shares of Korean steelmakers including POSCO, whose leading shareholders include Berkshire Hathaway Inc, rallied after the quake, on expectations that they would benefit from reduced shipments from Japan at home and the Asian markets.
Shares of POSOC closed 0.4% lower at 497,500 won on Thursday, underperforming the broader market.
Hard to fully pass on cost rise to clients
Asked how much and when POSCO would raise prices, Hwang said: "We need to raise steel prices by 200,000 won (USD 178.3) per tonne due to rising costs, but I don't think we can raise that much." POSCO is considering lifting prices in early or middle part of April-June period, he added.
Analysts ranged POSCO's possible price hikes at 100,000 won through 150,000 won, while Hwang said "100,000 won was too low."
Lee Won-jae, an analyst at SK Securities, said: "Even if POSCO were to raise more than 100,000 won, it would be difficult to maintain such prices due to the gap with imports from Japan and China. The domestic market is driven by buyers, not sellers."
POSCO has held local steel prices flat since it hiked in June 2010 for third-quarter sales. For the October-December quarter last year, POSCO posted lower-than-expected profit because of its failure to pass on surging costs to customers.
South Korea's second-largest steelmaker Hyundai Steel said on Tuesday it needs to hike major steel product prices no later than early April. Two leading Chinese steelmakers increased prices for the third month in a row for March, before keeping them unchanged for April.
Hwang said Asia's steel demand is seen healthy, driven by expected demand as Japan moves to repair quake-related damages, adding that China's recent efforts to tame inflation through tighter monetary policy were "not too worrisome."
"The quake dampens Japan's steel demand in the short term, but eventually the demand will jump because a large amount of industrial materials are in need for reconstruction," he said.
Tags: POSCO, steelmaker, South Korea, Japan, Hwang Eun-Yeon
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